Novelis (Novelis) Q1 2026 earnings summary

Executive summary

• Net sales rose 13% year-over-year to $4.7 billion, driven by strong beverage packaging demand and a 1% increase in shipments to 963 kilotons, though offset by weaker automotive and specialty markets.

• Adjusted EBITDA fell 17% year-over-year to $416 million, impacted by higher scrap prices, tariffs, and unfavorable product mix, with a $28 million net negative tariff impact.

• Net income attributable to the common shareholder declined 36% to $96 million; excluding special items, net income was $116 million, down 43% year-over-year.

• Cost reduction and operational efficiency initiatives are underway, targeting over $100 million in run-rate savings by fiscal year-end and $300 million by FY2028.

• Major investment projects, including the Bay Minette, Alabama rolling and recycling plant, remain on track for commissioning in the second half of calendar 2026.

Financial highlights

• Adjusted EBITDA per ton was $432, down 18% year-over-year.

• Adjusted free cash flow was an outflow of $295 million, mainly due to lower EBITDA and higher capital expenditures.

• Net leverage ratio stood at 3.2x, with liquidity of $3.0 billion as of June 30, 2025.

• Total capital expenditures reached $386 million, primarily for new rolling and recycling capacity.

• $35 million return of capital paid to shareholder in Q1.

Outlook and guidance

• Capital expenditures for FY2026 are projected at $1.9–$2.2 billion, including $300 million for maintenance.

• Cost reduction and tariff mitigation actions are expected to offset most of the $60 million per quarter unmitigated tariff impact by Q4, with improvement anticipated from Q3 onward.

• Management expects continued strong long-term demand for flat-rolled aluminum, especially in beverage packaging.